“Investor Confidence moves back to bullish zone

Investors anticipate improving COVID-19 situation on vaccine rollout and local economic recovery

Worries over COVID-19 spread and local political uncertainty weigh on sentiment” 

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                                                                       FETCO Press Release: Monday 6 September 2021 

Paiboon Nalinthrangkurn, Chairman of the Federation of Thai Capital Market Organizations (FETCO), said “the FETCO Investor Confidence Index (FETCO ICI) in August, which anticipated the market condition over the next three months, is at 144.37, surging 124.3 percent from the previous month, and moving from bearish mode to “bullish” zone. Investors anticipate improving COVID-19 situation on the back of vaccine distribution as the most supportive factor, followed by pace of local economic recovery and fund inflow. However, the current wave of COVID-19 spread in Thailand, followed by local political uncertainty and international conflicts are the most concerning factors.

Highlights of FETCO Investor Confidence Index surveyed in August 2021 are as follows.

  • Overall FETCO Investor Confidence index for the next three months (November 2021) is in “bullish” zone (120-159 of FETCO ICI Criterion), jumping 124.3 percent to 144.37 from the previous month.
  • Confidence of retail and institutional investors rises to “bullish” zone while that of proprietary and foreign investors shifts to “very bullish” zone.
  • Most attractive sector to investors is Banking (BANK).
  • Least attractive sector to investors is Fashion (FASHION).
  • Most influential factor driving the Thai stock market is vaccine distribution to improve COVID-19 situation.
  • Most important factor impeding the Thai stock market is the current wave of COVID-19 spread.

“The survey result in August 2021 shows that retail investors’ confidence increases 95 percent to 127.96. That of proprietary traders skyrockets 233 percent to 166.67. Confidence of local institutional investors rises 130 percent to 133.33 while that of foreign investors notches higher 140 percent to 160.00.”

Early in August saw the SET Index underperformed peers and global markets as mostly fueled by the highly transmissible Delta variant, the number of COVID-19 confirmed cases climbed to over 20,000 cases and over 200 deaths per day. In the meantime, the pace of vaccine distribution was slow and access to vaccine was limited. In addition, deteriorated private consumption rooted from tightened lockdown measures and simmering political noise kept the SET Index in tight range of 1,521.72 – 1,553.18. However, in late August, the benchmark index broke 1,600-mark for the first time in three months, thanks to the Bank of Thailand’s additional measures to support COVID-19 impacted businesses, sign of easing lockdown measures from the government and a signal that FED is about to start tapering while holding its move to raise its policy rate. As a result, foreign investors became net buyers in the Thai stock market for the first time in this year. SET Index closed at 1,638.75, up 7.68 percent from the previous month.

External factors to monitor include FED’s meeting in September. If hawkish signal is detected, global stock market may be pressured. Another key event is major central banks’ meetings although ECB, BOJ and BOE are expected to keep their policy rate unchanged. In addition, international conflicts especially the situation in Afghanistan that may be exacerbated, will also be on the radar. Locally, investors will focus whether the sharp rise of COVID-19 spread will return as easing lockdown measures allow some businesses to resume. Also, focus will be on the imports of alternative vaccines, especially mRNA type that is expected to arrive to Thailand sooner than earlier planned. Investors will see if the Bank of Thailand’s Monetary Policy Committee will continue to keep its policy rate unchanged at the upcoming meeting. Local political movements including no-confidence debate against ministers, 2022 fiscal budget bill debate and constitution bill amendment debate, may intensify the local political conflicts.